The same month it declared a “new world of travel,” Airbnb is reportedly abandoning its attempts at facilitating domestic travel in the world’s most populous country.
Airbnb will end its business focused on short-term rentals in China, six years after intensifying its focus in the country, CNBC first reported.
The company will maintain a presence in China to focus on outbound travel by Chinese residents, a person familiar with the decision told Inman, but all listings will be removed by the summer.
The move wouldn’t be significant, as bookings in China amounted to just 1 percent of the company’s business. Still, it marks the end of more than six years of attempts to expand into one of the world’s largest economies.
The company didn’t immediately respond to a request for comment.
A person familiar with the decision said the country’s strict and ongoing lockdowns related to the pandemic contributed to the decision to shift its focus in the region.
“Airbnb expects outbound tourism from China to rebound as borders reopen and COVID-19 subsides,” the person said. “Likewise for cross-border travel throughout APAC.”
Airbnb first opened an office in China in 2016. It had long faced far steeper regulatory requirements that made it difficult to compete in the market, according to numerous reports detailing the company’s struggles to hire a head of Airbnb China.
It also had to hire local engineers to focus on designing a user experience that met the needs of Chinese consumers, CNBC previously reported.
It all made doing business in the country more costly before further disruption from the pandemic. It confirmed what others had suspected: It can be difficult for American tech companies to compete in China.
In 2017, Chinese media speculated the company would fail to compete with local competitors.
“Tujia ranks as the primary rival in the Chinese market, which sports a valuation of over US$1 billion, with competitors such as Xiaozhu and Mayi also making China a far more competitive market than what Airbnb faces elsewhere.”
The outlet pointed to Uber’s failure to thrive in the country as evidence that Airbnb could fail to gain a foothold despite its intentions of expanding there.
“Sporting some 75,000 property listings in China, Airbnb is also dwarfed by local competitors — Tujia lists around 500,000 properties in China, and has also been expanding its pool of listed properties throughout East Asia,” Jing Daily wrote. “Xiaozhu, while small in comparison to Tujia, has said that it expects to report 500 percent organic growth for 2016, and reached over 100,000 listings last year.”
Airbnb had been in talks to acquire Xiaozhu, Insider reported in 2016. That deal never went through, and Xiaozhu eventually reached unicorn status and remained an Airbnb competitor in the country.
As further evidence of the reaction to the announcement, Airbnb stocks ticked up in after-hours trading after finishing slightly up for the day.